Free college: an idea whose time has come

By Kathy G.

I've already linked to this article about unequal America in the current issue of Harvard Magazine, but I wanted to be sure to blog about it again, because it really is excellent. It contains a wealth of fascinating information, as you'll see if you read it (which I strongly urge you to do).

But for now I'll just focus on one point: the article mentions a new book written by Harvard economists Lawrence Katz and Claudia Goldin, The Race Between Technology and Education, which examines why economic inequality has increased so precipitously over the last several decades. Now, the explanation they give is the one that is extremely most popular among American economists: that technological changes have led to a higher demand for "skilled," college-educated workers, relative to non-college educated workers. According to this theory, because the demand for educated workers outpaces the supply, the wage premium for college-educated workers has increased, and this is what has driven the growth in inequality.

I don't think this is wrong, exactly, but I don't think it's the only, or even the main, cause of near record-high levels of economic inequality in this country. I tend to give more weight to the impact of changing norms and institutions  -- in other words, politics. Nevertheless, I think it would be a good idea if more people went to college. So do Katz and Goldin, but they have identified a problem: the increasing cost of college tuition:

In 1950, the average tuition price at a private college was roughly 14 percent of the U.S. median family income; public college tuition was even lower (only 4 percent). Percentages for both types of institutions fell further in the ensuing decades, bottoming out around 1980, but then rising steeply ever since. In 2005, the cost of attending the average public college was 11 percent of median family income; for private colleges, the average was 45 percent. There is financial aid, but not enough, and the system “can be harder to crack than Fort Knox,” Katz and Goldin write in their new book, The Race between Education and Technology.

Their solution: why don't Americans "fund higher education the way they chose to fund universal public high-school education early in the last century"?

“If you had made people borrow money to go to high school in the early twentieth century,” says Katz, “you wouldn’t have seen the same sort of expansion.” But as technology continues to advance, if Americans do not break down barriers to higher education, the authors foresee an even more acute shortage of highly trained workers—and, other things being equal, a further increase in inequality.

I was very, very pleased to hear Katz say this, because when I've brought up this idea to economists of my acquaintance, it has not exactly been warmly received.* I've generally gotten two objections to this. First of all, it's argued that, while the fact that not enough people are going to college is indeed a problem, almost everyone can afford college, since they have access to financial aid, student loans, and the like. And indeed, the economist James Heckman has estimated that at most only 8% of Americans cannot "afford" college.

The other argument I hear is that if we made public colleges free, we'd have to increase taxes, and inevitably much of the tax burden would fall on those, such as working class Americans, who are least likely to go on to higher education.

My response is that, first of all, I would advocate that tax increases be shifted heavily towards the wealthy. As to the argument that most Americans can afford college -- well, it depends on what you mean by "afford." Yes, technically, many people who aren't attending college now could, by working their way through school and by pulling together a complicated bundle of grants, scholarships, and loans, nevertheless be doing so.  Hey, that's the way I did it! But if you're self-funding your own education like that, you have to be highly motivated, you have to understand that a college education is very much in your economic interest, and you have be willing to take a big financial risk. Over the short-term, the opportunity cost of going to college can be substantial, and taking out loans can leave you financially vulnerable, especially if you don't complete your degree (and large numbers of people don't).

Many people, particularly many poor and working class people, aren't aware of the enormous economic benefits of going to college. And many of them are also reluctant to take out loans -- they've seen people around them crushed by payday loans and other forms of predatory lending, and they don't want to take that kind of risk.

Even if free college would on average benefit middle class kids more than poor and working class kids, I still think it's important that everyone who is capable of college-level work have the opportunity to attend college -- and to do so without having to worry about being crushed by a heavy burden of debt. Both for equity reasons (every academically qualified person, no matter how poor, deserves to go to college if she so desires) and for efficiency reasons (because our economy needs more college-educated workers), free college is a policy that makes an awful lot of sense. Especially because it would only cost an estimated 30 to 60 billion extra dollars of public money.

I also like Katz's reasoning that high school was free at a time when that was usually what was necessary to get people into the middle class, and now that college is just as important now as high school used to be, why shouldn't we modernize our educational policies and make public colleges tuition-free as well? Katz argues, and I concur, that if we hadn't had so many people going to high school in the early 20th century, we wouldn't have had the enormous economic expansion we later experienced. By not funding higher education at much higher levels, and thus causing so many young people to graduate from college burdened by debt -- and causing many more to not even go to college in the first place, we as a society are shooting ourselves in the foot. Penny-wise and pound-foolish, and all of that. I do hope the arguments of centrist economists like Goldin and Katz cut some ice with the powers that be. We dirty effin' lefties have been saying the same thing for years, but maybe if it comes out of the mouths of Katz and Goldin, policymakers will actually listen.

*Indeed, contrary to the misperceptions of some, I'm not some little mini-me who goes around parroting the great big ideas my almighty professors have stuffed inside my feeble little brain. My professors here at the policy school, and indeed my fellow Ph.D. students, are far more conservative than I am, and in classroom discussions I've frequently been among the few, and often the only one, asking skeptical questions and arguing contrary points of view. Lots of the ideas I believe in and the research I find most compelling -- about feminist economics, for example, or the political and institutional determinants of inequality -- have not been assigned readings by any means, but stuff I've come across myself.

Comments

[Karmakin]

I think it's a really good idea from a social point of view, however, the idea that it'll do anything to end inequality, quite frankly is short-sighted IMO.

It'll shift around the inequality, to be sure, but if one takes the idea that prices are set by the market, then an influx of more educated workers will create negative market pressures, dropping down wages for those jobs.

What I suspect will happen in such a case is that as more educated jobs are more emotionally desired than non-educated jobs, that they'll actually start to pay less than the latter as the barriers of access start to fall.

I don't know is that's good or bad, but emotionally I say that's a good thing.

[arbitrista]

I think this is a wonderful policy idea. The effects on inequality could be indirect through a reduction in student loan debt, but that would be a sufficient public policy gain in and of itself. I've been kicking around this proposal for some time myself, and I have to say I think the Democrats are missing a great political opportunity by proposing it.

[Eric]

I think it's a good idea, but I think we also need to examine our educational system at a more basic level.

Part of the problem is that the college diploma has become what the high school diploma was 50 years ago; it's the most important and necessary credential for entering the work force. And graduate degrees have become the new college diplomas.

What's our workforce getting for this? Is there *really* anything that's being taught at community and state colleges that can't be taught at the high school level?

Perhaps instead we should look into re-investing in shop classes and home economics classes at the high school level - stuff that actually teaches actual life skills that are both useful and not easily offshored. Last I checked, we actually have somewhat of a shortage of nurses, mechanics, plumbers, electricians, etc - all relatively high paying jobs that will continue to be in demand for the foreseeable future.

Not that I have anything against higher education or college specifically, and I'm all for enabling more people to go. But I do question why we've essentially tacked on an extra four years of education requirement for the American worker in the first place. Minimally, we could make a much better use of the high school experience than treating it as a four year college entrance exam.

[Mary Racine]

Hmm. Interesting to read this post appears on the same day that Matt Yglesias writes about how no one from Dalton got into Harvard this year. No mention of the fact that this is the first class admitted under the "families with income under $180,000 will pay no more that 10% of income as tuition (and no tuition under $60,000)." Guess that brought a lot of candidates out of the woodwork.

I do agree with Eric that we need to make a high school degree count for something again. Students who know that they are not headed to the liberal arts colleges should be able to transfer to a community college for their junior and senior years to finish off their high school credits and do some sort of preprofessional program. My high school had a medical paraprofessional program, where students took English and Government in the AM and health aide classes at the community college. There also was a retail business program that had classrooms at the mall. Those kids ended up being able to work their way through college. Why'd they do it? All the people working retail telling them they regretted not having a degree.

One other story - during my temp adventures I ended up putting binders together for a consulting company. It was literally printing out attachments to emails, putting them into folders and when you determined that all the files needed were there, putting it into a binder with dividers, for the consultants to give to the client at their presentations. Everyone doing this work had a college degree, some from expensive private schools. There was some discussion about this, and one woman from BU was practically in tears protesting that this was work that required a college degree. It was just so pitiful that I couldn't really laugh in her face. But employers demand the degree, when a mite of common sense is all that is needed.

[David Moisan]

I'm a Pell Grant graduate, 20 years ago when it was actually possible to pay for state school with grants.

I agree with Eric. Everyone who wants to go to college and has the ability for it, should go, but everyone should NOT have to go to college to get an education.

I read a research paper somewhere that talked about credentialism and put forth the idea that college degrees were worth less and less with time. The authors' solution called for ending all grants, federal loans and most scholarships. To me, this is not so much a solution as a disaster, though it would cement the elites' hold on the institution, perhaps that's the idea.

I always admired how the Japanese dealt with voke ed: Their voke ed students had courses like calculus when it was appropriate and in many ways had a very vigorous education in their chosen field, perhaps more than many Japanese colleges from what I read.

I've always considered myself in the working class, despite my BSCS, and have thought that the specialty I have now (IT) could just as easily be taught outside college.

If we can't value that kind of education, we don't value any of it. Recall that quote about plumbers and philosophers.

[Bloix]

But why is the college degree the new high school diploma? And why do employers require college degrees for work that could be done by people with high school diplomas?

The reason has nothing to do with increased needs for trained employees in the information age and everything do with anti-discrimination law.

In 1971, the Supreme Court, in Griggs v Duke Power, held that employees cannot use high school diplomas as a way of selecting employees absent a showing of "business necessity" for the skills obtained by the diploma. It also held that employers cannot give aptitude or skills tests without that showing. The reason was that companies were using high school diplomas to keep blacks out of skilled jobs.

But without being able to use diplomas in hiring, it became almost impossible for an employer even to select employees with decent reading comprehension and arithmetic skills. the "business necessity" test meant that any time an employer created a new position, it was inviting a lawsuit if it made a diploma a job requirement.

So big corporate employers said "fuck it, any time we need someone who can read and spell and add and subtract, we'll make a college degree a requirement."

And the Supreme Court has never held that an employer has to show that a degree requirement must be justified as a "business necessity."

So you have all these jobs and occupations that could be filled by high school grads, who could learn on the job and rise in the organization - but the door is closed to them. It used to be that a teller could be bank president, or a gofer could become head of claims in an insurance company. Not any more, and not because the college education actually provides anything useful.

The sort of college education that produces graduates in communications and business and recreational studies adds nothing of value to an employer over a high school diploma - but the employer can't legally use the diploma as a hiring tool. That's the problem we need to address. We don't need millions more college grads with degrees in marketing.

[EdgeWise]

Yep, free college would probably help the middle class. Still leaves the lowerclass out in the cold. Free Healthcare would benefit more universally, although possibly more expensively.

Those who have trouble graduating high school due to impoverished backgrounds, will have trouble attending and graduating from prestigious schools. It could just shift the class signal to MBA/JD/PhD/MA/MS while delaying workforce entry. While this would be a net productivity loss, it would probably be a boon to our democracy, and aid public health campaigns.

[Rachael]

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